Exhibit 99
FOR RELEASE 6:00 AM EST, THURSDAY, JANUARY 26, 2006
| Contact: | Robert S. Tissue, Senior VP & CFO |
| Telephone: | (304) 530-0552 |
| Email: | rtissue@SummitFGI.com |
SUMMIT FINANCIAL GROUP REPORTS RECORD EARNINGS FOR 18TH CONSECUTIVE YEAR
MOOREFIELD, WV -- January 26, 2006 -- Summit Financial Group, Inc. (NASDAQ: SMMF) today reported 2005 net income of $11.2 million, an increase of 6.0 percent from the $10.6 million reported for the prior year. Diluted earnings per share were $1.56 compared with $1.49 for 2004, an increase of 4.7 percent. As previously disclosed, included in earnings for the current period was a fourth quarter 2005 other-than-temporary non-cash impairment charge of $1.5 million pre-tax, equivalent to $940,000 after-tax, or $0.13 per diluted share. This impairment charge relates to $5.7 million of certain preferred stock issuances of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation which Summit continues to own, and was taken primarily due to difficulty in accurately projecting the future recovery period of these securities. Excluding this impairment charge, 2005 earnings were $12.2 million, up 14.8 percent, and $1.69 per share, up 13.4 percent, compared with the prior year. Results reflect strong revenue growth, both from community banking and mortgage banking activities, and controlled expense growth.
For 2005, the returns on average shareholders' equity and average assets were 15.87 percent and 1.16 percent, respectively, compared with 2004 ratios of 17.21 percent and 1.26 percent. Excluding the impairment charge, returns on average shareholders’ equity and average assets for 2005 were 17.20 percent and 1.26 percent, respectively.
For the fourth quarter of 2005, Summit reported net income of $2.44 million, an increase of 3.6 percent from the $2.36 million reported for the fourth quarter of 2004. Diluted earnings per share were $0.34 compared with $0.33 for the prior-year period, up 3.0 percent. Excluding the impairment charge, fourth quarter 2005 earnings were $3.4 million, up 43.5 percent over the 2004 period, and diluted earnings per share were $0.47, up 42.4 percent. Quarterly performance mirrors that of the entire year; revenue from community banking activities remains strong, as does mortgage banking, albeit on a seasonally-adjusted basis.
For the fourth quarter of 2005, the returns on average shareholders' equity and average assets were 13.15 percent and 0.92 percent, respectively, compared with prior-year period ratios of 14.33 percent and 1.07 percent. Returns on average shareholders’ equity and average assets for the fourth quarter of 2005 excluding the impairment charge were 18.21 percent and 1.27 percent, respectively.
H. Charles Maddy, III, President and Chief Executive Officer, commented, “We are very pleased to report our 18th consecutive year of earnings growth. The trends we reported earlier in the year continued throughout 2005. Both segments produced strong revenue growth, supported by well-controlled expenses, and in the case of our community banking segment, continued excellent asset quality. Our recent investments in people and infrastructure were well-timed; as a result of having the right people in the right places, we experienced exceptional loan growth - 31.6 percent for the year, and in the second half of 2005, 40.4 percent annualized. We continue to see ample lending opportunities, particularly in northern Virginia, where the demographics are among the best in the country. I am pleased to report that Summit Financial and our subsidiary banks are winning more than their share of this growth.”
Mr. Maddy continued, “Mortgage origination volumes for the fourth quarter of 2005 surpassed our expectations. The fourth and first quarters are typically slower for our mortgage banking business. However, we saw strong year over year fourth quarter growth as well as a 20.6 percent increase in mortgage volumes for the year. Volume gains more than offset a slightly less profitable mix, while expense growth was well-controlled.”
“To sum up our year, it was strong, with positive trends that appear to continue into 2006. We plan to take advantage of market opportunities,” Mr. Maddy concluded.
2005 CONSOLIDATED RESULTS
Total revenue for the year 2005, consisting of net interest income plus non-interest income, was $59.7 million, an increase of 8.5 percent over 2004; excluding the impairment charge, total revenue increased 11.2 percent to $61.1 million. Net interest income increased 10.9 percent above the prior year, to $30.8 million, reflecting 15.1 percent growth in average earning assets, partially offset by a 15 basis point decline in the net interest margin to 3.51 percent. Mr. Maddy noted that funding costs negatively impacted the net interest margin, as exceptionally strong loan growth surpassed growth in core deposits, requiring continued reliance on higher cost time and brokered deposits. Non-interest income, excluding the impairment charge, was $30.4 million, an increase of 11.5 percent over the prior year. Mortgage origination revenue from Summit Mortgage, the Company's mortgage banking unit, increased 9.5 percent in 2005, while bank service fees and other income grew 24.4 percent during the same period.
For the fourth quarter of 2005, revenue was $13.8 million compared with $13.7 million for the prior-year fourth quarter, an increase of 0.8 percent; excluding the impairment charge, fourth quarter 2005 revenue was $15.3 million, an increase of 11.8 percent. Net interest income increased 12.6 percent, reflecting 20.7 percent growth in average earning assets, partially offset by a 30 basis point decline in the net interest margin to 3.39 percent. Non-interest income for the fourth quarter of 2005, excluding the impairment charge, was $7.0 million compared with $6.3 million in the prior-year period, an increase of 10.9 percent.
Non-interest expense for the fiscal year 2005 was $42.2 million, an 8.9 percent increase over the $38.8 million reported for the prior year. Salaries and employee benefits represented the largest category of expense growth, accounting for approximately two-thirds of the $3.4 million increase; salaries grew $2.2 million, or 12.3 percent. The efficiency ratio improved to 66.93 percent for 2005, from 68.33 percent for the prior fiscal year.
For the fourth quarter of 2005, non-interest expense was $10.4 million compared with $10.0 million for the year-ago fourth quarter, a 4.2 percent increase. The efficiency ratio improved to 65.50 percent for the current quarter from 70.50 percent for the prior-year period.
Asset quality remains strong. Net charge-offs were $401,000 for 2005, equivalent to 0.06 percent of average loans. Nonperforming assets were $1.8 million, or 0.16 percent of assets at December 31, 2005, compared with $1.9 million or 0.18 percent of assets at September, 30, 2005, and $1.7 million, or 0.19 percent of assets, at December 31, 2004. At period-end, the allowance for losses was 0.75 percent of loans.
Assets at December 31, 2005 were $1.1 billion, an increase of 24.7 percent over the last twelve months. The increase was driven by portfolio loan growth of $192.1 million, up 31.6 percent, to $799.9 million. Commercial real estate loans, up $157.2 million or 56.2 percent, were the largest contributors to this growth, and now constitute 54.5 percent of the loan portfolio. Since June 30, 2005, loans increased $134.4 million or 20.2 percent (40.4 percent annualized). Mr. Maddy noted that loan growth for the second half of 2005 benefited from the three lenders hired over the past 18 months who had become more seasoned with the Company and its markets.
Deposits at December 31, 2005 were $673.9 million, an increase of $149.3 million, or 28.5 percent from twelve months ago. Since June 30, 2005, deposits increased $108.7 million, or 19.2 percent (38.5 percent annualized). More importantly, core deposits (checking and savings accounts) increased 35.0 percent year-over-year, and 20.2 percent since the June 30, 2005 (40.4 percent annualized). Mr. Maddy added, “Deposit gathering has become a “core” priority at our community banks. We have developed a competitive suite of products, and our retail bankers’ compensation will soon be more closely tied to established goals for core deposit growth.”
Shareholders' equity at period end was $73.8 million, an increase of 12.3 percent over the last twelve months. To support its continued balance sheet growth, Summit issued an additional $8.0 million in variable-rate trust preferred securities in December 2005. Common shares outstanding totaled 7,126,220 at December 31, 2005.
OPERATING SEGMENT RESULTS
Community Banking Financial Performance
Net income excluding the impairment charge increased 10.9 percent to $10.7 million. Total revenue excluding the impairment charge increased 12.9 percent to $34.4 million, while non-interest expense increased 13.7 percent to $17.6 million. The Community Banking segment's efficiency ratio was 52.85 percent for 2005 compared to 52.13 percent for the prior year.
Net income for the fourth quarter of 2005 excluding the impairment charge was $3.0 million compared with $2.5 million for the fourth quarter of 2004, an increase of 24.1 percent. Total revenue excluding the impairment charge totaled $9.1 million, an increase of 12.9 percent over the $8.1 million produced in the prior-year period. Non-interest expense increased 9.1 percent to $4.6 million. The Community Banking segment’s efficiency ratio for the fourth quarter of 2005 improved markedly to 50.73 percent from 52.70 percent in the fourth quarter of 2004.
Mortgage Banking Financial Performance
Net income for 2005 was $2.4 million, an increase of 32.4 percent over the prior fiscal year. Revenue generated from loan sales totaled $26.4 million, up 9.5 percent from $24.1 million in the prior year. Revenue growth reflects a larger volume of loan sales in 2005, up 23.0 percent from 2004 to $309.2 million, partially offset by a less profitable loan mix.
Non-interest expense was well-controlled for the year, up 5.3 percent, despite growth in loan originations of 20.6 percent to $314.7 million in 2005. This category represents expenses incurred primarily from salaries, bonuses and other activities associated with loan originations. Expenses incurred per loan originated declined 8.8 percent per loan for 2005 due to greater economies of scale resulting from higher origination volumes and improved operational efficiencies within the organization.
For the fourth quarter of 2005, net income was $490 thousand compared with $118 thousand for the fourth quarter of 2004, an increase of 315.3 percent. Revenue was $6.1 million, up 12.4 percent from the $5.4 million reported in the prior-year period, reflecting a 19.1 percent increase in loan sales to $73.9 million, partially offset by a less profitable mix.
Loan originations in the fourth quarter of 2005 were $78.3 million, a seasonal decline of 6.6 percent from the linked quarter but 18.7 percent ahead of the prior-year fourth quarter. Non-interest expense primarily associated with loan originations totaled $5.6 million, a 2.6 percent increase over the $5.4 million incurred in the prior-year period, however expenses per loan originated declined 16.0 percent in fourth quarter 2005 compared to fourth quarter 2004.
ABOUT THE COMPANY
Summit Financial Group, Inc., a financial holding company with total assets of $1.1 billion, operates fourteen banking locations through its two wholly-owned community banks: Summit Community Bank, headquartered in Moorefield, West Virginia; and Shenandoah Valley National Bank in Winchester, Virginia. Summit also operates Summit Mortgage, a residential mortgage loan originator in Chesapeake, Virginia and Summit Insurance Services, LLC in Moorefield, West Virginia.
NON-GAAP FINANCIAL MEASURES
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted several GAAP performance measures to exclude the effects of the non-cash, other-than-temporary impairment charge on securities it recorded in the 4th quarter of 2005. Management deems this charge to be unusual in nature and believes presentations of financial measures excluding the impact of this item provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Please refer to Summit's filings with the Securities and Exchange Commission for a summary of important factors that could affect Summit's forward-looking statements. Summit undertakes no obligation to revise these statements following the date of this press release.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | |
Quarterly Performance Summary -- Q4 2005 vs Q4 2004 | | | | | |
| | | | | | |
| | | For the Quarter Ended | | Percent | |
Dollars in thousands, except per share amounts | | 12/31/2005 | | 12/31/2004 | | Change | |
| | | | | | | | |
Condensed Statements of Income | | | | | | | |
| Interest income | | | | | | | | | | |
| Loans, including fees | | $ | 14,260 | | $ | 9,814 | | | 45.3 | % |
| Securities | | | 2,368 | | | 2,294 | | | 3.2 | % |
| Other | | | 30 | | | 30 | | | 0.0 | % |
| Total interest income | | | 16,658 | | | 12,138 | | | 37.2 | % |
| Interest expense | | | | | | | | | | |
| Deposits | | | 4,450 | | | 2,456 | | | 81.2 | % |
| Borrowings | | | 3,971 | | | 2,366 | | | 67.8 | % |
| Total interest expense | | | 8,421 | | | 4,822 | | | 74.6 | % |
| Net interest income | | | 8,237 | | | 7,316 | | | 12.6 | % |
| Provision for loan losses | | | 300 | | | 292 | | | 2.7 | % |
| Net interest income after provision | | | | | | | | | | |
| for loan losses | | | 7,937 | | | 7,024 | | | 13.0 | % |
| Noninterest income | | | | | | | | | | |
| Service fee income | | | 680 | | | 592 | | | 14.9 | % |
| Mortgage origination revenue | | | 6,098 | | | 5,423 | | | 12.4 | % |
| Securities gains (losses) | | | (1,434 | ) | | 32 | | | n/m | |
| Other income | | | 182 | | | 287 | | | -36.6 | % |
| Total noninterest income | | | 5,526 | | | 6,334 | | | -12.8 | % |
| Noninterest expense | | | | | | | | | | |
| Salaries and employee benefits | | | 4,944 | | | 4,607 | | | 7.3 | % |
| Net occupancy expense | | | 510 | | | 404 | | | 26.2 | % |
| Equipment expense | | | 470 | | | 473 | | | -0.6 | % |
| Postage expense | | | 1,387 | | | 1,361 | | | 1.9 | % |
| Advertising | | | 1,168 | | | 1,231 | | | -5.1 | % |
| Other expenses | | | 1,960 | | | 1,939 | | | 1.1 | % |
| Total noninterest expense | | | 10,439 | | | 10,015 | | | 4.2 | % |
| Income before income taxes | | | 3,024 | | | 3,343 | | | -9.5 | % |
| Income taxes | | | 582 | | | 986 | | | -41.0 | % |
| Net income | | $ | 2,442 | | $ | 2,357 | | | 3.6 | % |
| | | | | | | | | | | |
Per Share Data | | | | | | | | | | |
| Basic earnings | | $ | 0.34 | | $ | 0.34 | | | 0.0 | % |
| Diluted earnings | | $ | 0.34 | | $ | 0.33 | | | 3.0 | % |
| Average shares outstanding | | | | | | | | | | |
| Basic | | | 7,125,994 | | | 7,032,512 | | | 1.3 | % |
| Diluted | | | 7,198,068 | | | 7,149,981 | | | 0.7 | % |
| | | | | | | | | | | |
Performance Ratios | | | | | | | | | | |
| Return on average equity | | | 13.15 | % | | 14.33 | % | | -8.2 | % |
| Return on average assets | | | 0.92 | % | | 1.07 | % | | -14.0 | % |
| Net yield on earning assets - taxable equivalent | | | 3.39 | % | | 3.69 | % | | -8.1 | % |
| Efficiency ratio consolidated(A) | | | 65.50 | % | | 70.50 | % | | -7.1 | % |
| Efficiency ratio excluding mortgage banking (A) | | | 50.73 | % | | 52.70 | % | | -3.7 | % |
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | |
Annual Performance Summary -- 2005 vs 2004 | | | | | | | |
| | | | | | |
| | | For the Year Ended | | Percent | |
Dollars in thousands, except per share amounts | | 12/31/2005 | | 12/31/2004 | | Change | |
| | | | | | | | |
Condensed Statements of Income | | | | | | | |
| Interest income | | | | | | | | | | |
| Loans, including fees | | $ | 48,002 | | $ | 36,207 | | | 32.6 | % |
| Securities | | | 9,201 | | | 9,403 | | | -2.1 | % |
| Other | | | 108 | | | 127 | | | -15.0 | % |
| Total interest income | | | 57,311 | | | 45,737 | | | 25.3 | % |
| Interest expense | | | | | | | | | | |
| Deposits | | | 13,402 | | | 9,710 | | | 38.0 | % |
| Borrowings | | | 13,104 | | | 8,250 | | | 58.8 | % |
| Total interest expense | | | 26,506 | | | 17,960 | | | 47.6 | % |
| Net interest income | | | 30,805 | | | 27,777 | | | 10.9 | % |
| Provision for loan losses | | | 1,479 | | | 1,050 | | | 40.9 | % |
| Net interest income after provision | | | | | | | | | | |
| for loan losses | | | 29,326 | | | 26,727 | | | 9.7 | % |
| Noninterest income | | | | | | | | | | |
| Service fee income | | | 2,589 | | | 2,238 | | | 15.7 | % |
| Mortgage origination revenue | | | 26,371 | | | 24,089 | | | 9.5 | % |
| Securities gains (losses) | | | (1,390 | ) | | 33 | | | n/m | |
| Other income | | | 1,304 | | | 892 | | | 46.2 | % |
| Total noninterest income | | | 28,874 | | | 27,252 | | | 6.0 | % |
| Noninterest expense | | | | | | | | | | |
| Salaries and employee benefits | | | 20,315 | | | 18,087 | | | 12.3 | % |
| Net occupancy expense | | | 1,881 | | | 1,503 | | | 25.1 | % |
| Equipment expense | | | 1,911 | | | 1,776 | | | 7.6 | % |
| Postage expense | | | 5,863 | | | 5,851 | | | 0.2 | % |
| Advertising | | | 4,878 | | | 4,725 | | | 3.2 | % |
| Other expenses | | | 7,398 | | | 6,847 | | | 8.0 | % |
| Total noninterest expense | | | 42,246 | | | 38,789 | | | 8.9 | % |
| Income before income taxes | | | 15,954 | | | 15,190 | | | 5.0 | % |
| Income taxes | | | 4,712 | | | 4,582 | | | 2.8 | % |
| Net income | | $ | 11,242 | | $ | 10,608 | | | 6.0 | % |
| | | | | | | | | | | |
Per Share Data | | | | | | | | | | |
| Basic earnings | | $ | 1.58 | | $ | 1.51 | | | 4.6 | % |
| Diluted earnings | | $ | 1.56 | | $ | 1.49 | | | 4.7 | % |
| Average shares outstanding | | | | | | | | | | |
| Basic | | | 7,093,402 | | | 7,025,118 | | | 1.0 | % |
| Diluted | | | 7,206,838 | | | 7,121,761 | | | 1.2 | % |
| | | | | | | | | | | |
Performance Ratios | | | | | | | | | | |
| Return on average equity | | | 15.87 | % | | 17.21 | % | | -7.8 | % |
| Return on average assets | | | 1.16 | % | | 1.26 | % | | -7.9 | % |
| Net yield on earning assets - taxable equivalent | | | 3.51 | % | | 3.66 | % | | -4.1 | % |
| Efficiency ratio consolidated(A) | | | 66.93 | % | | 68.33 | % | | -2.0 | % |
| Efficiency ratio excluding mortgage banking (A) | | | 52.85 | % | | 52.13 | % | | 1.4 | % |
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
Five Quarter Performance Summary | | | | | | | | | | | |
| | | | | | | | | | |
| | | For the Quarter Ended | |
Dollars in thousands, except per share amounts | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | |
| | | | | | | | | | | | |
Condensed Statements of Income | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 14,260 | | $ | 12,527 | | $ | 11,205 | | $ | 10,010 | | $ | 9,814 | |
| Securities | | | 2,368 | | | 2,283 | | | 2,291 | | | 2,258 | | | 2,294 | |
| Other | | | 30 | | | 27 | | | 28 | | | 25 | | | 30 | |
| Total interest income | | | 16,658 | | | 14,837 | | | 13,524 | | | 12,293 | | | 12,138 | |
| Interest expense | | | | | | | | | | | | | | | | |
| Deposits | | | 4,450 | | | 3,509 | | | 2,926 | | | 2,516 | | | 2,456 | |
| Borrowings | | | 3,971 | | | 3,518 | | | 2,994 | | | 2,622 | | | 2,366 | |
| Total interest expense | | | 8,421 | | | 7,027 | | | 5,920 | | | 5,138 | | | 4,822 | |
| Net interest income | | | 8,237 | | | 7,810 | | | 7,604 | | | 7,155 | | | 7,316 | |
| Provision for loan losses | | | 300 | | | 424 | | | 425 | | | 330 | | | 292 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 7,937 | | | 7,386 | | | 7,179 | | | 6,825 | | | 7,024 | |
| Noninterest income | | | | | | | | | | | | | | | | |
| Service fee income | | | 680 | | | 711 | | | 651 | | | 547 | | | 592 | |
| Mortgage origination revenue | | | 6,098 | | | 7,304 | | | 7,113 | | | 5,856 | | | 5,423 | |
| Securities gains (losses) | | | (1,434 | ) | | 39 | | | 5 | | | - | | | 32 | |
| Other income | | | 182 | | | 411 | | | 446 | | | 264 | | | 287 | |
| Total noninterest income | | | 5,526 | | | 8,465 | | | 8,215 | | | 6,667 | | | 6,334 | |
| Noninterest expense | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 4,944 | | | 5,435 | | | 5,394 | | | 4,542 | | | 4,607 | |
| Net occupancy expense | | | 510 | | | 479 | | | 463 | | | 429 | | | 404 | |
| Equipment expense | | | 470 | | | 465 | | | 483 | | | 493 | | | 473 | |
| Postage expense | | | 1,387 | | | 1,451 | | | 1,458 | | | 1,567 | | | 1,361 | |
| Advertising | | | 1,168 | | | 1,164 | | | 1,222 | | | 1,325 | | | 1,231 | |
| Other expenses | | | 1,960 | | | 1,884 | | | 1,855 | | | 1,699 | | | 1,939 | |
| Total noninterest expense | | | 10,439 | | | 10,878 | | | 10,875 | | | 10,055 | | | 10,015 | |
| Income before income taxes | | | 3,024 | | | 4,973 | | | 4,519 | | | 3,437 | | | 3,343 | |
| Income taxes | | | 582 | | | 1,700 | | | 1,403 | | | 1,026 | | | 986 | |
| Net income | | $ | 2,442 | | $ | 3,273 | | $ | 3,116 | | $ | 2,411 | | $ | 2,357 | |
| | | | | | | | | | | | | | | | | |
Per Share Data | | | | | | | | | | | | | | | | |
| Basic earnings | | $ | 0.34 | | $ | 0.46 | | $ | 0.44 | | $ | 0.34 | | $ | 0.34 | |
| Diluted earnings | | $ | 0.34 | | $ | 0.45 | | $ | 0.43 | | $ | 0.34 | | $ | 0.33 | |
| Average shares outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 7,125,994 | | | 7,125,483 | | | 7,081,044 | | | 7,039,783 | | | 7,032,512 | |
| Diluted | | | 7,198,068 | | | 7,211,331 | | | 7,205,377 | | | 7,171,099 | | | 7,149,981 | |
| | | | | | | | | | | | | | | | | |
Performance Ratios | | | | | | | | | | | | | | | | |
| Return on average equity | | | 13.15 | % | | 18.24 | % | | 18.21 | % | | 14.53 | % | | 14.33 | % |
| Return on average assets | | | 0.92 | % | | 1.33 | % | | 1.34 | % | | 1.08 | % | | 1.07 | % |
| Net yield on earning assets - taxable equivalent | | | 3.39 | % | | 3.47 | % | | 3.61 | % | | 3.59 | % | | 3.69 | % |
| Efficiency ratio consolidated (A) | | | 65.50 | % | | 65.40 | % | | 66.98 | % | | 70.26 | % | | 70.50 | % |
| Efficiency ratio excluding mortgage banking (A) | | | 50.73 | % | | 53.75 | % | | 54.15 | % | | 52.90 | % | | 52.70 | % |
NOTE: (A) - Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMFSegment Information | | | | | | | | | | | |
For the Quarter Ended December 31, 2005 | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Community | | Mortgage | | Parent | | | | | |
Dollars in thousands | | Banking | | Banking | | and Other | | Eliminations | | Total | |
| | | | | | | | | | | | |
Condensed Statements of Income | | | | | | | | | | | |
| Interest income | | $ | 16,479 | | $ | 473 | | $ | 8 | | $ | (302 | ) | $ | 16,658 | |
| Interest expense | | | 8,130 | | | 301 | | | 292 | | | (302 | ) | | 8,421 | |
| Net interest income | | | 8,349 | | | 172 | | | (284 | ) | | - | | | 8,237 | |
| Provision for loan losses | | | 260 | | | 40 | | | - | | | - | | | 300 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 8,089 | | | 132 | | | (284 | ) | | - | | | 7,937 | |
| Noninterest income | | | (744 | ) | | 6,098 | | | 1,465 | | | (1,293 | ) | | 5,526 | |
| Noninterest expense | | | 4,637 | | | 5,586 | | | 1,509 | | | (1,293 | ) | | 10,439 | |
| Income before income taxes | | | 2,708 | | | 644 | | | (328 | ) | | - | | | 3,024 | |
| Income taxes | | | 605 | | | 154 | | | (177 | ) | | - | | | 582 | |
| Net income | | $ | 2,103 | | $ | 490 | | $ | (151 | ) | $ | - | | $ | 2,442 | |
Intersegment revenue (expense) | | $ | (923 | ) | $ | (361 | ) | $ | 1,284 | | $ | - | | $ | - | |
Average assets | | $ | 1,050,961 | | $ | 23,028 | | $ | 91,169 | | $ | (103,002 | ) | $ | 1,062,156 | |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
Segment Information | | | | | | | | | | | |
For the Quarter Ended December 31, 2004 | | | | | | | | | | | |
| | | | | | | | | | |
| | | Community | | Mortgage | | Parent | | | | | |
Dollars in thousands | | Banking | | Banking | | and Other | | Eliminations | | Total | |
| | | | | | | | | | | | |
Condensed Statements of Income | | | | | | | | | | | |
| Interest income | | $ | 11,935 | | $ | 419 | | $ | 5 | | $ | (221 | ) | $ | 12,138 | |
| Interest expense | | | 4,670 | | | 220 | | | 153 | | | (221 | ) | | 4,822 | |
| Net interest income | | | 7,265 | | | 199 | | | (148 | ) | | - | | | 7,316 | |
| Provision for loan losses | | | 292 | | | - | | | - | | | - | | | 292 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 6,973 | | | 199 | | | (148 | ) | | - | | | 7,024 | |
| Noninterest income | | | 798 | | | 5,423 | | | 1,183 | | | (1,070 | ) | | 6,334 | |
| Noninterest expense | | | 4,251 | | | 5,445 | | | 1,389 | | | (1,070 | ) | | 10,015 | |
| Income before income taxes | | | 3,520 | | | 177 | | | (354 | ) | | - | | | 3,343 | |
| Income taxes | | | 1,067 | | | 59 | | | (140 | ) | | - | | | 986 | |
| Net income | | $ | 2,453 | | $ | 118 | | $ | (214 | ) | $ | - | | $ | 2,357 | |
Intersegment revenue (expense) | | $ | (798 | ) | $ | (265 | ) | $ | 1,063 | | $ | - | | $ | - | |
Average assets | | $ | 867,934 | | $ | 20,639 | | $ | 78,885 | | $ | (88,743 | ) | $ | 878,715 | |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
Segment Information | | | | | | | | | | | |
For the Year Ended December 31, 2005 | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Community | | Mortgage | | Parent | | | | | |
Dollars in thousands | | Banking | | Banking | | and Other | | Eliminations | | Total | |
| | | | | | | | | | | | |
Condensed Statements of Income | | | | | | | | | | | |
| Interest income | | $ | 56,630 | | $ | 1,776 | | $ | 27 | | $ | (1,122 | ) | $ | 57,311 | |
| Interest expense | | | 25,630 | | | 1,118 | | | 880 | | | (1,122 | ) | | 26,506 | |
| Net interest income | | | 31,000 | | | 658 | | | (853 | ) | | - | | | 30,805 | |
| Provision for loan losses | | | 1,295 | | | 184 | | | - | | | - | | | 1,479 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 29,705 | | | 474 | | | (853 | ) | | - | | | 29,326 | |
| Noninterest income | | | 1,861 | | | 26,371 | | | 5,507 | | | (4,865 | ) | | 28,874 | |
| Noninterest expense | | | 17,643 | | | 23,208 | | | 6,260 | | | (4,865 | ) | | 42,246 | |
| Income before income taxes | | | 13,923 | | | 3,637 | | | (1,606 | ) | | - | | | 15,954 | |
| Income taxes | | | 4,133 | | | 1,262 | | | (683 | ) | | - | | | 4,712 | |
| Net income | | $ | 9,790 | | $ | 2,375 | | $ | (923 | ) | $ | - | | $ | 11,242 | |
Intersegment revenue (expense) | | $ | (3,491 | ) | $ | (1,342 | ) | $ | 4,833 | | $ | - | | $ | - | |
Average assets | | $ | 958,210 | | $ | 22,613 | | $ | 84,433 | | $ | (96,288 | ) | $ | 968,968 | |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
Segment Information | | | | | | | | | | | |
For the Year Ended December 31, 2004 | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Community | | Mortgage | | Parent | | | | | |
Dollars in thousands | | Banking | | Banking | | and Other | | Eliminations | | Total | |
| | | | | | | | | | | | |
Condensed Statements of Income | | | | | | | | | | | |
| Interest income | | $ | 45,031 | | $ | 1,348 | | $ | 16 | | $ | (658 | ) | $ | 45,737 | |
| Interest expense | | | 17,460 | | | 652 | | | 506 | | | (658 | ) | | 17,960 | |
| Net interest income | | | 27,571 | | | 696 | | | (490 | ) | | - | | | 27,777 | |
| Provision for loan losses | | | 1,050 | | | - | | | - | | | - | | | 1,050 | |
| Net interest income after provision | | | | | | | | | | | | | | | | |
| for loan losses | | | 26,521 | | | 696 | | | (490 | ) | | - | | | 26,727 | |
| Noninterest income | | | 2,863 | | | 24,087 | | | 4,215 | | | (3,913 | ) | | 27,252 | |
| Noninterest expense | | | 15,523 | | | 22,045 | | | 5,134 | | | (3,913 | ) | | 38,789 | |
| Income before income taxes | | | 13,861 | | | 2,738 | | | (1,409 | ) | | - | | | 15,190 | |
| Income taxes | | | 4,189 | | | 944 | | | (551 | ) | | - | | | 4,582 | |
| Net income | | $ | 9,672 | | $ | 1,794 | | $ | (858 | ) | $ | - | | $ | 10,608 | |
Intersegment revenue (expense) | | $ | (3,063 | ) | $ | (827 | ) | $ | 3,890 | | $ | - | | $ | - | |
Average assets | | $ | 817,414 | | $ | 16,701 | | $ | 74,101 | | $ | (67,333 | ) | $ | 840,883 | |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
Selected Balance Sheet Data | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | |
Dollars in thousands, except per share amounts | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | |
| | | | | | | | | | | | |
| Assets | | $ | 1,109,532 | | $ | 1,029,103 | | $ | 946,487 | | $ | 907,264 | | $ | 889,489 | |
| Securities | | | 223,772 | | | 215,757 | | | 209,561 | | | 209,223 | | | 211,362 | |
| Loans held for sale | | | 16,585 | | | 12,695 | | | 16,994 | | | 15,766 | | | 14,274 | |
| Loans, net | | | 793,767 | | | 729,431 | | | 659,792 | | | 623,863 | | | 602,728 | |
| Intangible assets | | | 3,348 | | | 3,385 | | | 3,423 | | | 3,461 | | | 3,499 | |
| Deposits | | | 673,901 | | | 628,919 | | | 565,167 | | | 537,412 | | | 524,614 | |
| Short-term borrowings | | | 182,028 | | | 139,681 | | | 127,974 | | | 129,697 | | | 120,629 | |
| Long-term borrowings and | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 170,501 | | | 179,383 | | | 176,796 | | | 165,384 | | | 172,201 | |
| Shareholders' equity | | | 73,803 | | | 72,429 | | | 69,838 | | | 66,400 | | | 65,708 | |
| | | | | | | | | | | | | | | | | |
| Book value per share | | $ | 10.36 | | $ | 10.16 | | $ | 9.80 | | $ | 9.43 | | $ | 9.33 | |
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | |
Portfolio Loan Composition | | | | | | | | | | | |
| | | | | | | | | | | | |
Dollars in thousands | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | |
| | | | | | | | | | | | |
| Commercial | | $ | 63,206 | | $ | 60,723 | | $ | 59,067 | | $ | 56,394 | | $ | 53,226 | |
| Commercial real estate | | | 436,803 | | | 376,506 | | | 328,071 | | | 296,911 | | | 279,631 | |
| Residential construction | | | 4,343 | | | 4,125 | | | 3,815 | | | 3,806 | | | 3,916 | |
| Residential mortgage | | | 251,886 | | | 249,383 | | | 229,769 | | | 226,866 | | | 223,689 | |
| Consumer | | | 36,863 | | | 37,431 | | | 36,993 | | | 37,066 | | | 38,948 | |
| Other | | | 8,598 | | | 8,824 | | | 9,233 | | | 9,458 | | | 9,605 | |
| Total loans | | | 801,699 | | | 736,992 | | | 666,948 | | | 630,501 | | | 609,015 | |
| Less unearned fees and interest | | | 1,780 | | | 1,640 | | | 1,459 | | | 1,322 | | | 1,214 | |
| Total loans net of unearned fees and interest | | | 799,919 | | | 735,352 | | | 665,489 | | | 629,179 | | | 607,801 | |
| Less allowance for loan losses | | | 6,152 | | | 5,921 | | | 5,697 | | | 5,316 | | | 5,073 | |
| Loans, net | | $ | 793,767 | | $ | 729,431 | | $ | 659,792 | | $ | 623,863 | | $ | 602,728 | |
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | | | |
Deposit Composition | | | | | | | | | | | |
| | | | | | | | | | | | |
Dollars in thousands | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | |
| | | | | | | | | | | | |
| Non interest bearing checking | | $ | 62,631 | | $ | 69,346 | | $ | 63,207 | | $ | 57,008 | | $ | 55,402 | |
| Interest bearing checking | | | 200,638 | | | 169,893 | | | 145,626 | | | 134,500 | | | 122,355 | |
| Savings | | | 44,681 | | | 45,868 | | | 47,407 | | | 50,647 | | | 50,428 | |
| Retail time deposits | | | 237,154 | | | 236,396 | | | 231,645 | | | 240,541 | | | 243,161 | |
| Brokered time deposits | | | 128,797 | | | 107,416 | | | 77,282 | | | 54,716 | | | 53,268 | |
| Total deposits | | $ | 673,901 | | $ | 628,919 | | $ | 565,167 | | $ | 537,412 | | $ | 524,614 | |
| | | | | | | | | | |
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF) | | | | | | | |
Mortgage Banking Segment Loan Activity | | | | | | | |
| | | | | | | | | | | | |
| | | For the Quarter Ended | |
Dollars in thousands | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | |
| | | | | | | | | | | | |
Loans originated | | | | | | | | | | | | | | | | |
| Amount | | $ | 78,297 | | $ | 83,860 | | $ | 83,616 | | $ | 68,929 | | $ | 65,983 | |
| Number | | | 1,443 | | | 1,567 | | | 1,578 | | | 1,308 | | | 1,182 | |
| | | | | | | | | | | | | | | | | |
Loans sold | | | | | | | | | | | | | | | | |
| Amount | | $ | 73,903 | | $ | 87,071 | | $ | 81,422 | | $ | 66,761 | | $ | 62,043 | |
| Number | | | 1,376 | | | 1,566 | | | 1,549 | | | 1,295 | | | 1,148 | |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | |
Asset Quality Information | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | For the Quarter Ended | |
Dollars in thousands | | 12/31/2005 | | 9/30/2005 | | 6/30/2005 | | 3/31/2005 | | 12/31/2004 | |
| | | | | | | | | | | | |
| Net loan charge-off's | | $ | 70 | | $ | 200 | | $ | 44 | | $ | 87 | | $ | 357 | |
| Net loan charge-off's to average loans (annualized) | | | 0.04 | % | | 0.11 | % | | 0.03 | % | | 0.05 | % | | 0.25 | % |
| Allowance for loan losses | | $ | 6,152 | | $ | 5,921 | | $ | 5,697 | | $ | 5,316 | | $ | 5,073 | |
| Allowance for loan losses as a percentage | | | | | | | | | | | | | | | | |
| of period end loans | | | 0.75 | % | | 0.79 | % | | 0.83 | % | | 0.82 | % | | 0.82 | % |
| Nonperforming assets: | | | | | | | | | | | | | | | | |
| Nonperforming loans | | $ | 1,382 | | $ | 1,017 | | $ | 911 | | $ | 836 | | $ | 672 | |
| Foreclosed properties and | | | | | | | | | | | | | | | | |
| repossessed assets | | | 395 | | | 862 | | | 949 | | | 608 | | | 646 | |
| Nonaccrual securities | | | - | | | - | | | 326 | | | 334 | | | 349 | |
| Total | | $ | 1,777 | | $ | 1,879 | | $ | 2,186 | | $ | 1,778 | | $ | 1,667 | |
| | | | | | | | | | | | | | | | | |
| Nonperforming loans to period end loans | | | 0.17 | % | | 0.14 | % | | 0.13 | % | | 0.13 | % | | 0.11 | % |
| Nonperforming assets to period end assets | | | 0.16 | % | | 0.18 | % | | 0.23 | % | | 0.20 | % | | 0.19 | % |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | |
Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | | | | |
Q4 2005 vs Q4 2004 | | | | | | | | | | | | | |
| | | Q4 2005 | | Q4 2004 | |
| | | Average | | Earnings / | | Yield / | | Average | | Earnings / | | Yield / | |
Dollars in thousands | | Balances | | Expense | | Rate | | Balances | | Expense | | Rate | |
| | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | |
| Interest earning assets | | | | | | | | | | | | | | | | | | | |
| Loans, net of unearned interest | | | | | | | | | | | | | | | | | | | |
| Taxable | | $ | 773,394 | | $ | 14,160 | | | 7.26 | % | $ | 605,020 | | $ | 9,701 | | | 6.41 | % |
| Tax-exempt | | | 8,106 | | | 150 | | | 7.34 | % | | 9,381 | | | 173 | | | 7.38 | % |
| Securities | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 169,871 | | | 1,847 | | | 4.31 | % | | 162,810 | | | 1,734 | | | 4.26 | % |
| Tax-exempt | | | 46,315 | | | 778 | | | 6.66 | % | | 48,387 | | | 835 | | | 6.90 | % |
| Interest bearing deposits other banks | | | | | | | | | | | | | | | | | | | |
| and Federal funds sold | | | 2,899 | | | 32 | | | 4.38 | % | | 3,249 | | | 31 | | | 3.82 | % |
| Total interest earning assets | | | 1,000,585 | | | 16,967 | | | 6.73 | % | | 828,847 | | | 12,474 | | | 6.02 | % |
| | | | | | | | | | | | | | | | | | | | |
| Noninterest earning assets | | | | | | | | | | | | | | | | | | | |
| Cash & due from banks | | | 20,525 | | | | | | | | | 17,698 | | | | | | | |
| Premises & equipment | | | 22,732 | | | | | | | | | 20,573 | | | | | | | |
| Other assets | | | 24,389 | | | | | | | | | 16,806 | | | | | | | |
| Allowance for loan losses | | | (6,075 | ) | | | | | | | | (5,209 | ) | | | | | | |
| Total assets | | $ | 1,062,156 | | | | | | | | $ | 878,715 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | |
| Interest bearing liabilities | | | | | | | | | | | | | | | | | | | |
| Interest bearing | | | | | | | | | | | | | | | | | | | |
| demand deposits | | $ | 181,251 | | $ | 1,252 | | | 2.74 | % | $ | 122,038 | | $ | 343 | | | 1.12 | % |
| Savings deposits | | | 44,917 | | | 77 | | | 0.68 | % | | 51,508 | | | 68 | | | 0.53 | % |
| Time deposits | | | 352,146 | | | 3,122 | | | 3.52 | % | | 305,411 | | | 2,045 | | | 2.68 | % |
| Short-term borrowings | | | 160,159 | | | 1,700 | | | 4.21 | % | | 91,763 | | | 512 | | | 2.23 | % |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 175,116 | | | 2,270 | | | 5.14 | % | | 177,709 | | | 1,854 | | | 4.17 | % |
| | | | 913,589 | | | 8,421 | | | 3.66 | % | | 748,429 | | | 4,822 | | | 2.58 | % |
| Noninterest bearing liabilities | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 65,378 | | | | | | | | | 58,921 | | | | | | | |
| Other liabilities | | | 8,882 | | | | | | | | | 5,557 | | | | | | | |
| Total liabilities | | | 987,849 | | | | | | | | | 812,907 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 74,307 | | | | | | | | | 65,808 | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | |
| shareholders' equity | | $ | 1,062,156 | | | | | | | | $ | 878,715 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
NET INTEREST EARNINGS | | | | | $ | 8,546 | | | | | | | | $ | 7,652 | | | | |
| | | | | | | | | | | | | | | | | | | | |
NET INTEREST YIELD ON EARNING ASSETS | | | | | 3.39 | % | | | | | | | | 3.69 | % |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | | | | | |
Average Balance Sheet, Interest Earnings & Expenses and Average Rates | | | | | | | |
YTD 2005 vs YTD 2004 | | | | | | | | | | | | | |
| | | For the Year Ended December 30, | |
| | | 2005 | | 2004 | |
| | | Average | | Earnings / | | Yield / | | Average | | Earnings / | | Yield / | |
Dollars in thousands | | Balances | | Expense | | Rate | | Balances | | Expense | | Rate | |
| | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | |
| Interest earning assets | | | | | | | | | | | | | |
| Loans, net of unearned interest | | | | | | | | | | | | | |
| Taxable | | $ | 691,041 | | $ | 47,582 | | | 6.89 | % | $ | 567,066 | | $ | 35,770 | | | 6.31 | % |
| Tax-exempt | | | 8,688 | | | 635 | | | 7.31 | % | | 8,818 | | | 662 | | | 7.51 | % |
| Securities | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 164,611 | | | 7,076 | | | 4.30 | % | | 166,882 | | | 7,193 | | | 4.31 | % |
| Tax-exempt | | | 47,563 | | | 3,180 | | | 6.69 | % | | 48,356 | | | 3,303 | | | 6.83 | % |
| Interest bearing deposits other banks | | | | | | | | | | | | | | | | | | | |
| and Federal funds sold | | | 2,779 | | | 109 | | | 3.92 | % | | 3,489 | | | 127 | | | 3.64 | % |
| Total interest earning assets | | | 914,682 | | | 58,582 | | | 6.40 | % | | 794,611 | | | 47,055 | | | 5.92 | % |
| | | | | | | | | | | | | | | | | | | | |
| Noninterest earning assets | | | | | | | | | | | | | | | | | | | |
| Cash & due from banks | | | 17,583 | | | | | | | | | 14,367 | | | | | | | |
| Premises & equipment | | | 21,234 | | | | | | | | | 19,998 | | | | | | | |
| Other assets | | | 21,121 | | | | | | | | | 16,879 | | | | | | | |
| Allowance for loan losses | | | (5,652 | ) | | | | | | | | (4,972 | ) | | | | | | |
| Total assets | | $ | 968,968 | | | | | | | | $ | 840,883 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | | | | |
| Interest bearing liabilities | | | | | | | | | | | | | | | | | | | |
| Interest bearing | | | | | | | | | | | | | | | | | | | |
| demand deposits | | $ | 151,271 | | $ | 3,120 | | | 2.06 | % | $ | 120,066 | | $ | 1,183 | | | 0.99 | % |
| Savings deposits | | | 47,745 | | | 312 | | | 0.65 | % | | 49,806 | | | 242 | | | 0.49 | % |
| Time deposits | | | 319,377 | | | 9,970 | | | 3.12 | % | | 306,850 | | | 8,285 | | | 2.70 | % |
| Short-term borrowings | | | 138,694 | | | 4,824 | | | 3.48 | % | | 70,318 | | | 1,204 | | | 1.71 | % |
| Long-term borrowings and | | | | | | | | | | | | | | | | | | | |
| subordinated debentures | | | 172,260 | | | 8,280 | | | 4.81 | % | | 172,580 | | | 7,046 | | | 4.08 | % |
| | | | 829,347 | | | 26,506 | | | 3.20 | % | | 719,620 | | | 17,960 | | | 2.50 | % |
| Noninterest bearing liabilities | | | | | | | | | | | | | | | | | | | |
| Demand deposits | | | 61,543 | | | | | | | | | 54,212 | | | | | | | |
| Other liabilities | | | 7,258 | | | | | | | | | 5,416 | | | | | | | |
| Total liabilities | | | 898,148 | | | | | | | | | 779,248 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 70,820 | | | | | | | | | 61,635 | | | | | | | |
| Total liabilities and | | | | | | | | | | | | | | | | | | | |
| shareholders' equity | | $ | 968,968 | | | | | | | | $ | 840,883 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
NET INTEREST EARNINGS | | | | | $ | 32,076 | | | | | | | | $ | 29,095 | | | | |
| | | | | | | | | | | | | | | | | | | | |
NET INTEREST YIELD ON EARNING ASSETS | | | | | 3.51 | % | | | | | | | | 3.66 | % |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | | | |
| | | | | | | | | | |
| | | | | | | | |
| | | For the Quarter Ended | | For the Year Ended | |
Dollars in thousands | | 12/31/2005 | | 12/31/2004 | | 12/31/2005 | | 12/31/2004 | |
| | | | | | | | | | |
| Net income - excluding other-than- | | | | | | | | | |
| temporary impairment charge on | | | | | | | | | |
| securities | | $ | 3,382 | | $ | 2,357 | | $ | 12,182 | | $ | 10,608 | |
| | | | | | | | | | | | | | |
| Other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | | (1,500 | ) | | - | | | (1,500 | ) | | - | |
| Applicable income tax effect | | | 560 | | | - | | | 560 | | | - | |
| | | | (940 | ) | | - | | | (940 | ) | | - | |
| | | | | | | | | | | | | | |
| GAAP net income | | $ | 2,442 | | $ | 2,357 | | $ | 11,242 | | $ | 10,608 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Diluted earnings per share - excluding | | | | | | | | | | | | | |
| other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | $ | 0.47 | | $ | 0.33 | | $ | 1.69 | | $ | 1.49 | |
| | | | | | | | | | | | | | |
| Other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | | (0.21 | ) | | - | | | (0.21 | ) | | - | |
| Applicable income tax effect | | | 0.08 | | | - | | | 0.08 | | | - | |
| | | | (0.13 | ) | | - | | | (0.13 | ) | | - | |
| | | | | | | | | | | | | | |
| GAAP diluted earnings per share | | $ | 0.34 | | $ | 0.33 | | $ | 1.56 | | $ | 1.49 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Total revenue - excluding other-than- | | | | | | | | | | | | | |
| temporary impairment charge on | | | | | | | | | | | | | |
| securities | | $ | 15,263 | | $ | 13,650 | | $ | 61,179 | | $ | 55,029 | |
| | | | | | | | | | | | | | |
| Other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | | (1,500 | ) | | - | | | (1,500 | ) | | - | |
| | | | | | | | | | | | | | |
| GAAP total revenue | | $ | 13,763 | | $ | 13,650 | | $ | 59,679 | | $ | 55,029 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Non-interest income - excluding | | | | | | | | | | | | | |
| other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | $ | 7,026 | | $ | 6,334 | | $ | 30,374 | | $ | 27,252 | |
| | | | | | | | | | | | | | |
| Other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | | (1,500 | ) | | - | | | (1,500 | ) | | - | |
| | | | | | | | | | | | | | |
| GAAP non-interest income | | $ | 5,526 | | $ | 6,334 | | $ | 28,874 | | $ | 27,252 | |
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF) | | | | | | | |
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures | | | |
(continued) | | | | | | | | | |
| | | | | | | | | | |
| | | For the Quarter Ended | | For the Year Ended | |
| | | 12/31/2005 | | 12/31/2004 | | 12/31/2005 | | 12/31/2004 | |
| | | | | | | | | | |
| Return on average equity (ROE) - excluding | | | | | | | | | | | | | |
| other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | | 18.21 | % | | 14.33 | % | | 17.20 | % | | 17.21 | % |
| | | | | | | | | | | | | | |
| Other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities, net | | | -5.06 | % | | 0.00 | % | | -1.33 | % | | 0.00 | % |
| | | | | | | | | | | | | | |
| GAAP ROE | | | 13.15 | % | | 14.33 | % | | 15.87 | % | | 17.21 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Return on average assets (ROA) - excluding | | | | | | | | | | | | | |
| other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities | | | 1.27 | % | | 1.07 | % | | 1.26 | % | | 1.26 | % |
| | | | | | | | | | | | | | |
| Other-than-temporary impairment | | | | | | | | | | | | | |
| charge on securities, net | | | -0.35 | % | | 0.00 | % | | -0.10 | % | | 0.00 | % |
| | | | | | | | | | | | | | |
| GAAP ROA | | | 0.92 | % | | 1.07 | % | | 1.16 | % | | 1.26 | % |
